What is Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) is the predicted net profit attributed to a customer over the entirety of their relationship with a company. It quantifies the long-term value each customer brings, guiding strategic decision making.

For example, if a subscription-based streaming service estimates a customer to generate $500 in revenue over their subscription lifetime, with a CAC of $100, resulting in a CLV of $400.

Businesses use CLV to prioritize customer acquisition efforts and tailor retention strategies, in order to maximize the value of each customer throughout the customer lifecycle.